Sunday, November 23, 2008

From the basement November 23

It must be winter. Ok, it's not winter but I'm in my basement blogging, a definite reminder that baseball and golf are over. I returned to the world of web egocentricity (is that a word? sounds like one) last week with a post on the Rule IV draft at Maury Brown's The Biz of Baseball .

This past season was the first for independent baseball in Ottawa. On a personal level, it was a hit. My boys (7 & 5) are now old enough to enjoy watching and playing baseball, so they had a blast. On a business level, well...the owners declared bankruptcy in September.

Earlier this week, CanAm League commissioner Miles Wolff came to town to officially announce that the league will field a team in Ottawa for the 09 season.

Is the upcoming 17th consecutive season of professional baseball in Ottawa also the last? Many factors will determine whether professional baseball continues to be played here, including support, municipal politics, the local pro sports landscape, real estate and CanAm League fortunes.

Bankruptcy for last season's owners left the CanAm League with few options. Minus Ottawa, the league was left with seven teams. An odd number of teams is unworkable in professional baseball because games are scheduled practically every day during the season. The necessity of fielding an 8th team left two options.

1. The league - de facto the owners of the franchises - operate a "road only" club. The league opted for this solution in 07, prior to coming to Ottawa for the 08 season. Funding salaries, travel and accommodation for an 8th "road only" team from the revenues of 7 actual franchises was evidently discussed but rejected by a majority of league owners.

2. Return to Ottawa. At the press conference this week, Commissioner Wolff emphasized that the league is returning for 09 because he believes this market can support a franchise long term. That is debatable - Mr. Wolff also admitted that he could provide a dozen reasons why his league should not have returned to Ottawa - but the return of the league for 09 is perhaps an example of making virtue out of necessity. The CanAm League, not last seasons' operators of the Ottawa franchise, entered into an agreement with the City of Ottawa to lease the ballpark for the 08 and 09 seasons. Mr. Wolff acknowledged at the press conference that his league was obligated to pay the rent for 09 regardless of whether they fielded a team. (Media reports have speculated that he personally, not the league, is responsible for the lease) The lease commitment for 09 has to have mitigated against the option of funding a "road only" club.

The fundamentals which made Ottawa a desirable market for the CanAm League to enter last season remain in place. These fundamentals are encouraging for those of us who hope that Ottawa remains home to a CanAm League franchise.

The Ottawa region, including Gatineau, is home to approximately 1.2 million. A market this size is appealing to a minor league where average per game attendance ranged from a high of 3200 (Quebec City) to a low of 1500 (Nashua) for the 2008 season. Ottawa was fifth in the eight team league in attendance in 2008, averaging 2,200 (more on that below).

The City of Ottawa possesses a first rate baseball facility. Rapids Stadium is a AAA quality ballpark in terms of playing field and clubhouses. The capacity of 10,000 is more than adequate and if anything too large for a CanAm League franchise. The stadium also houses a restaurant with a great view of the field, concessions are up to par and parking is ample for the great majority of dates.

Geographically, Ottawa is an important market for the CanAm League. The Quebec City franchise is easily the most successful franchise in the league and is owned by Commissioner Wolff. Mr. Wolff's long term plans for the league include franchises in Ottawa and Montreal. The Independent Baseball Insider newsletter reported last month that, "Wolff also frets that losing Ottawa could damage the league’s chances of eventually getting into Montreal, where the issue is lack of a suitable facility."

The 09 season is critical to the future of professional baseball in Ottawa. If the CanAm League (or a new local owner(s), Mr. Wolff is actively searching) incurs substantial losses this season it is unlikely they would pursue a lease extension. Without a tenant, it is unlikely the City of Ottawa would preserve the stadium.

How much support is necessary to make the CanAm League viable in Ottawa? According to Mr. Wolff, average attendance of 2,500 to 3,000 is required to sustain a franchise here. Mr. Wolff also stated that revenues of approximately $1.6 million per season would be sufficient to maintain a franchise in Ottawa. Some back of the envelope math suggests that revenues of $1.6 million are achievable with an average attendance of less than 2,500. 47 home dates per year X 2,500 per game = total attendance of 117,500. Total attendance of 117,500 divided into $1.6 million = a per cap of between $13 and $14. A per cap of $14 seems unreasonably low given that adult tickets were priced at $10 last season. Parking and concessions should easily bring the per cap above $14.

How did the Ottawa franchise fare in 08? Last season's owners, Rob Hall and Rick Anderson of Momentous / Zip.ca, claimed losses of $1.4 million last season. Much skepticism surrounds this claim as approximately half of the money owed to creditors is owed to Momentous, the parent company of the now defunct club. The CanAm League website lists Ottawa as 5th in the 8 team league in average attendance last season, virtually tied with New Jersey for 4th, at approximately 2,200 per game. But what does that 2,200 figure mean? Professional sports leagues, minor and major, often report "tickets issued" when publishing attendance figures. If the published figure of 2,200 is accurate it is difficult to understand how losses of $1.4 million were incurred, given Mr. Wolff's assertion that attendance of 2,500 should make a franchise viable. Anecdotally, I received 12 free tickets this past season (and I knew nobody in ownership or management), at games I attended announced attendance appeared inflated and a ticket office employee told me that "a ton" of tickets were being given away.

UPDATE NOVEMBER 26 : One of last year's co owners, Rob Hall, is quoted in today's Ottawa Sun, " The 2,200 number was the published number the league asked for that includes all the tickets that were given away. We donated a lot to charities and community groups, even our neighbours at Canadian Tire, to try and encourage attendance. Actual butts in the seats, the exact number was 1,256 (per game)" The next logical question is how many of those 1,256 are paid admissions?

Is average paid attendance of 2,500 fans per game realistic in Ottawa? The last season of AAA in Ottawa in 07 saw average per game attendance dwindle to below 1,900. The CanAm League does have a potentially significant advantage over AAA in that their season doesn't start until mid - late May and finishes at the end of August. During it's final seasons here, the AAA franchise did average attendance in the 2,000 plus range during the summer months that the CanAm League plays.

Is Ottawa a minor league city? Independent minor league baseball thrives in two Canadian cities, Quebec City and Winnipeg. As already stated, Quebec City consistently leads the CanAm League in attendance. Winnipeg's independent Northern League franchise attracted an average 6,500 fans per game last season, a typical level of support for the Goldeyes. Winnipeg is consistently amongst the leaders in minor league average attendance, both independent and affiliated. Minor league baseball is much less popular in other Canadian cities. Ottawa, Edmonton, Calgary and Vancouver are former AAA cities, all save for Vancouver are now home to independent league teams. Vancouver is now home to short season A level affiliated baseball. Calgary @ 1551 and Edmonton @ 1792 were last & 2nd last in Northern League average per game attendance in 07. Last season saw Calgary and Edmonton join the independent Golden League and average per game attendance declined to 1,269 in Calgary and 1,086 in Edmonton. The 09 season will see the arrival of another Canadian independent league franchise when the Golden League debuts in Victoria. Is it coincidence that minor league baseball is most popular in smaller Canadian cities that are not home to the NHL? Is minor league baseball too "minor league" for Ottawa?

What is the long term future of the CanAm League? According to figures compiled by The Independent Baseball Insider, CanAm League attendance declined by almost 200,000 last season. This is a precipitous decline, almost 20%, from 1,040,000 in 07 to 844,000 in 08. Will widespread economic problems impact significantly on all sports leagues, including the CanAm? Some think that minor league baseball has an advantage in difficult times because of it's relatively affordable prices. The larger concern might be the impact that economic problems have on the personal financial situations of franchise owners. Typically professional sports teams are owned by individuals who treat them as "hobbies ". The real worth of these owners is tied up in other businesses and investments. If the net worth of these owners is impacted will it cause some of them to walk away from their sports interests?

Has control of the real estate been a factor in ownership changes? The departure of AAA from Ottawa after the 07 season left the City of Ottawa without a tenant for it's baseball stadium. Local businessman David Butler approached the city (unsuccessfully) with a proposal to give him year round control of stadium real estate. Mr. Butler's proposal included fielding a CanAm League team but also the right to stage concerts ( Mr. Butler was involved in staging a concert at the stadium in July 07 ) and constructing a permanent roof over the playing field to allow for usage during the winter months. In May 08, then Rapidz co owner Rick Anderson told the Ottawa Business Journal that staging concerts at the stadium was part of his long term plan. He added that, "The lease requires us to obtain the city's approval if and when we do proceed with concerts,". On September 29, the Rapidz owners declared bankruptcy. Subsequent media reports revealed that there were failed negotiations between the Rapidz owners and the city over control of the stadium real estate. The former owners and city managers differed on the details of the negotiations but reports ranged from discussions of the club owners purchasing the real estate from the city to negotiating a long term lease granting the club full control over use of the real estate.

If new local ownership is found, will control of the real estate again be an issue? If yes, how might city council react? Professional baseball and The City of Ottawa have a problematic history that might work against any such proposals. The funding of the construction of the stadium was to be shared between the city and the original owner of the AAA franchise Howard Darwin. Mr. Darwin was to be responsible for 25% of the stadium costs with the city responsible for the balance. When Mr. Darwin sold the franchise in 2000, $3 million remained unpaid on the debt he owed to the City of Ottawa. (Mr. Darwin would differ) In addition to the unresolved dispute involving construction costs, the second AAA owner Ray Pecor, filed an $11 million lawsuit against the city over a dispute concerning parking at the stadium. The city has also experienced problems with P3 partnerships ( public / private ) involving city owned sports facilities, including the Bell Sensplex and the Ray Friel Centre.

Any future owner of a local baseball franchise wanting more revenue streams from the stadium might be competing with other professional sports interests also asking for political cooperation on use of city owned real estate. Local developers are currently negotiating with the city to redevelop Lansdowne Park. The proposed plan for the city owned land includes professional sports, concerts, retail and residential. In addition, if and when local NHL owner Eugene Melnyk is awarded an MLS franchise, he too will want city owned real estate to build on. Public and political support for city assisted professional sports ventures is probably finite.

Much has changed politically in the region since the city constructed the baseball stadium. The mayor at the time, Jim Durrell, was an avid supporter of professional sports in the city. Mr. Durrell was also effective in advancing his agenda at council. Regional politics are fundamentally different now due to the amalgamation in 2001 of the "old city of Ottawa" with the former suburban cities of Nepean, Orleans and Gloucester plus a handful of rural townships. Some question if there is sufficient popular and political support outside the "old city of Ottawa" to make government contributions to professional sports in “the old city” viable.

Few in this region would miss local professional baseball more than me, but my opinions on the future viability of the sport here have not changed since I wrote not quite a year ago; “ I hope I'm wrong but the reprieve for professional baseball in town will be short lived. “